eXtract takes pain in bid to move into investment
The transition exercise has seen it take billions of rand in write-downs and also sell mining equipment to repay debt
eXtract Group, chaired by former Harmony Gold CE Bernard Swanepoel, is moving towards becoming an investment company rather than a contract miner, an exercise that has seen it take billions of rand in write-downs and also sell mining equipment to repay debt.
eXtract, which has recently sold the fleet at its Tharisa mining contract to the chrome and platinum group metals miner, reported a R2.1bn loss for the 14 month period to end-August, including a R1.49bn impairment, compared to the R2.25bn figure of the previous period in which its impairments were nearly R1.5bn.
During the period, it sold R602m worth of mining assets as it leaves the operational side of mining. It sold a further R441m of assets by the end of October.
"The period under review has been both eventful and challenging for eXtract Group, with the group transitioning into its new form and subsequently changing the strategic direction of the group from a contract miner to an investment fund as led by management and the new board of directors," the company said.
Swanepoel is the executive chairman and his long-time business partner Clinton Halsey the interim acting CEO.
Swanepoel, who made his name at Harmony as a deal maker and one who could remove costs and flatten management structures to eke years of life out of old gold mines, had a far less successful run as chairman of JSE-listed Village Main Reef, which it could be argued was a failure.
eXtract ran into problems at three key contracts including Tharisa opting to move to owner-mining, which meant the "the remaining contracts could not be responsibly sustained due to their short-term nature and therefore a decision was made to exit or not renew any of the group’s remaining profitable contracts".
The group would sell all its assets held for sale to reduce debt and focus on becoming a mining fund.
enX Group had in October converted R1.8bn of debt into equity in eXtract. Asset sales would supply cash to pay the R250m of debt remaining to enX, bank debt as well as to provide seed capital for the company. The first investment was the Mooiplaats colliery bought from Coal of Africa.